Crypto News

Study: Despite Perceived Riskiness, Bitcoin Has a Higher Risk-Return Ratio Than Most Traditional Assets

It’s no secret that one hallmark of Bitcoin and the entire crypto markets is that they are volatile, going through major pricing cycles at a rapid speed that limits investing in the nascent technologies for only the brave of heart.

Despite this, recently released research signals that Bitcoin actually has a far higher risk-return ratio than most major traditional assets, which may provide some solace to crypto investors who fear that increased volatility will lead to potential losses down the road.

Bitcoin (BTC) Surges to Fresh Year-To-Date Highs Amidst Widespread Market Recovery

It is important to note that the positive risk-reward ratio that Bitcoin has compared to other assets has been largely driven by the cryptocurrency’s massive price surges that it has incurred since its inception, which have taken BTC from being a niche technology to a mainstream investment asset that is being closely looked at by retail and institutional investors alike.

In 2017, Bitcoin’s surge to highs of nearly $20,000 put the cryptocurrency on the world’s radar, and the ensuing crash served as a testament to the large volatility of the crypto, in spite of its promising use-cases and massive long-term potential.

This crash, which sent the cryptocurrency to lows of $3,200 in late-2018, left a bad taste in the mouths of many investors, and appeared to have confirmed the negative biases held by many economists and Bitcoin-bears who disdained the technology for a large number of reasons.

Despite this, over the past several weeks Bitcoin has posted a strong recovery that has allowed it to set fresh year-to-date highs around $8,300. This latest surge has shifted the market sentiment significantly and has led many investors to believe that the next bull trend is right around the corner.

Despite Massive Price Volatility, BTC Has a Far Better Risk-Reward Ratio Than Most Traditional Assets

Recent research from cryptocurrency exchange Binance’s research arm puts a spotlight on just how profitable Bitcoin has been historically, as well as how the cryptocurrency’s volatility is justified by a high risk-reward ratio.

“Despite its perceived riskiness, Bitcoin $BTC has provided far higher returns than most traditional assets over the past 2 years based on the following risk indicators/ratios,” Binance Research explained in a recent tweet.

The charts in the tweet above elucidate some interesting statistics regarding the performance of BTC as compared to other major assets, showing that Bitcoin’s 2-year returns of nearly 400% far surpass that of tech stocks – 46% – and that of the aggregated US stock market – 30%.

Moreover, while weighing the volatility of the various asset classes by using the Sortino Ratio – which is used to measure the positive volatility of an asset – Bitcoin has a positive measurement of 283%, while tech stocks have a positive ranking of 190% and the aggregated US stock market has a positive ranking of 136%.

When considering this data, it becomes apparent that Bitcoin is firmly in a long term uptrend, despite the bear market that has ensued since late-2017, and that it is likely to extend this upwards momentum as it continues to garner greater levels of adoption and incurs investments from more institutional groups.

Featured image from Shutterstock.

The post Study: Despite Perceived Riskiness, Bitcoin Has a Higher Risk-Return Ratio Than Most Traditional Assets appeared first on NewsBTC.

Related Crypto News

Analysts are Cautious of the Crypto Market’s Latest Push Higher; Factors to Consider
The aggregated crypto market saw a sharp rise today fueled by widespread liquidations of short positions This movement came...
Analyst Who Called Bitcoin Drop to $3,000s Expects Another Brutal Bear Market
Bitcoin has rallied strongly since the $3,700 lows established in March. From the bottom of the crash, the cryptocurrency...
LG Shows Interest in Distributed Ledger Technology, Joins Hedera Hashgraph Governing Council
South Korea’s electronic giant exhibits interest in distributed ledger technology. LG Electronics has joined the governing council of Hedera...
Lithuania’s Central Bank Completes Blockchain Regulatory Research
The Bank of Lithuania finished its research phase on the LBChain’s blockchain project that aims to provide a regulatory...
Ethereum Network Use Hits a New All-Time High — Will ETH Price Follow?
Interaction with the Ethereum network recently hit an all-time high but the increase in gas usage may pose problems...
GRX Group’s GRID Platform Hosts its First Tokenized Security
Digital advertising platform tribeOS launched its shares as tokenized securities on GSX Group’s GRID platform. Adtech firm tribeOS launched...

Featured Crypto News

Digital Currencies Could Threaten US Geopolitical Power, Warns JPMorgan
“There is no country with more to lose from the disruptive potential of digital currency than the United States,”...
Ethereum Could Stage Strong Rally As Double Bottom Pattern Emerges
Ethereum nosedived below the $202 support zone against the US Dollar. ETH price revisited the $192 support and it...
Bitcoin Traders Now Eye $6-7Ks After 4 Failed Attempts to Break $10K
The price of Bitcoin is set to test lower levels as support after numerous attempts to break $10,000 have...
Huobi, OKEx and Upbit Join Top 10 in Messari’s ‘Real Volume’ Revamp
Messari adds 10 new exchanges to its ‘real volume’ metric and overhauls methodology. Crypto data and research platform Messari...
Bitcoin Bulls Defend Against a Drop Below 200-Day EMA; What Comes Next?
It has been a rough day for the benchmark cryptocurrency. After flashing some signs of weakness, Bitcoin briefly dipped...
3 Signs Show Bitcoin on Verge of Macro Upsurge, Making $20k Imminent
After attempting to break decisively past $10,000 for the second time in a week, Bitcoin was rejected, plunging as...